Key facts
- UnitedHealth Group raised its 2026 adjusted profit per share forecast to $19.50-$20.00, up from at least $17.75.
- The company reported second-quarter adjusted earnings of $6.38 per share, exceeding the analyst estimate of $4.90.
- UnitedHealth's medical cost ratio improved to 86.70% in the second quarter.
- Optum's operating income increased 29% year-over-year to $4 billion in the second quarter.
- The company maintained its 2026 revenue outlook at $439 billion.
UnitedHealth Group raised its 2026 profit forecast on Thursday, driven by improved cost controls in its Medicare business and enhanced operating income within its Optum health services segment. The company's shares saw a nearly 5% increase in pre-market trading following the announcement.
During the second quarter, UnitedHealth reported adjusted earnings of $6.38 per share, surpassing the average analyst estimate of $4.90. Chief Financial Officer Wayne DeVeydt attributed these results to efforts to manage elevated medical costs, particularly within the Medicare insurance business, and favorable adjustments to payments for Medicaid plans. The company now projects its 2026 adjusted profit per share to be between $19.50 and $20.00, a significant increase from its previous forecast of at least $17.75, and above the analyst expectation of $18.47.
CEO Stephen Hemsley, who returned to lead the company last year after a ransomware attack and other challenges, has been implementing strategic changes. These include refocusing the organization, refreshing leadership, divesting certain health insurance products, and committing $1.5 billion to artificial intelligence investments.
UnitedHealth's medical cost ratio, which represents the percentage of premiums spent on medical care, improved to 86.70% in the second quarter, better than the analyst estimate of 88.47% and down from 89.4% in the prior year. This improvement was attributed to changes in insurance plan design and new pricing strategies. However, higher insurance costs led to a decline in membership, particularly among individuals purchasing plans through the Obamacare marketplace, following the expiration of pandemic-era government subsidies. DeVeydt anticipates approximately 500,000 disenrollments from Obamacare plans in 2026. The company maintained its overall revenue outlook for 2026 at $439 billion.
The Optum segment showed significant improvement, with its second-quarter operating income rising 29% year-over-year to $4 billion. This growth was fueled by enhanced operations at Optum Insight, the technology division, and better access to care through its clinical services. AI tools introduced this year have reportedly reduced administrative burdens, allowing Optum Health clinicians more time for patient care. DeVeydt expressed optimism that Optum is ahead of schedule in its multi-year journey to return to historical growth levels and margins, expecting full revenue growth recovery by 2028.